Mick Mulvaney, Trump’s pick for the CFPB, is currently director of the Office of Management and Budget.
Photograph: Alex Brandon/AP

A day after the official that Donald Trump wants to pass over as acting director of the Consumer Financial Protection Bureau (CFPB) asked a federal court to block the president’s own appointment, Trump’s pick for the role offered doughnuts to agency staff and told them to “disregard” his opponent’s instructions.

Trump's fight over consumer bureau with two directors 'may end up in court'

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Leandra English was promoted to interim director of the CFPB by its outgoing director, Richard Cordray, on Friday. Trump countered by naming the director of the Office of Management and Budget, Mick Mulvaney.

The White House and congressional Republicans expressed confidence in the president’s authority based on a 1998 federal law but English filed suit on Sunday night in the US district court for the District of Columbia, asking for a declaratory judgment and a temporary restraining order.

English cited the Dodd-Frank Act of 2010, which created the CFPB, and said that as deputy director she became acting director under the law. Her case argues that the law that the White House contends supports Trump’s appointment doesn’t apply when another statute designates a successor.

The issue is a political one. The CFPB was created by the Obama administration in the aftermath of the 2008 financial crash. One of the driving forces behind it was Elizabeth Warren, then a Harvard professor, now a Massachusetts senator and in many eyes a potential presidential candidate in 2020.

English was chief of staff to Cordray, who has long been criticised by congressional Republicans for being overzealous in cases such as that of Wells Fargo, a bank the CFPB fined a record $185m over its creation of false accounts to boost sales figures.

In a 2014 interview Mulvaney, then a South Carolina congressman and founder of the hard-right House Freedom Caucus, called the agency a “joke in a sick, sad kind of way” and an example of bureaucracy run amok. He is expected to dismantle much of what the bureau has done.

On Monday, English and Mulvaney duly sent rival emails to the CFPB’s 1,600 employees, the Washington Post reported. First, English wrote: “I hope that everyone had a great Thanksgiving. With Thanksgiving in mind, I wanted to take a moment to share my gratitude to all of you for your service.”

She signed off the message with the title “Acting Director.”

But it was Mulvaney, carrying a paper bag of doughnuts for staff, who entered the director’s office at CFPB headquarters. He fired back: “It has come to my attention that Ms English has reached out to many of you this morning via email in an attempt to exercise certain duties of the acting director. This is unfortunate but, in the atmosphere of the day, probably not unexpected.

“Please disregard any instructions you receive from Ms English in her presumed capacity as acting director.”

He added: “I apologize for this being the very first thing you hear from me. However, under the circumstances I suppose it is necessary. If you’re at 1700 G Street today, please stop by the fourth floor to say hello and grab a doughnut.”

White House press secretary Sarah Sanders said: “Director Mulvaney has taken charge of that agency and he has the full cooperation of the staff, appeared this morning and things went very well on his first day at CFPB. I think the legal outline says very clearly who is in charge of that agency ... We’re very confident in moving forward.”

Asked why English was not simply fired, Sanders replied: “Look, she’s still the deputy director and has a legal standing in that capacity, not as acting director.”

Figures from either side of the aisle joined battle. On Sunday, Warren tweeted: “Trump has put a cloud of uncertainty over the CFPB by attempting to override Dodd-Frank. Mulvaney should take no action until this dispute is decided in the courts.”

Barney Frank, the retired Massachusetts Democrat who was one of the authors of the law that created the CFPB, told CNN on Monday that Trump and Republicans were seeking to weaken the agency in an administrative fashion, rather than legislative, because it was popular for its work standing up to banks, mortgage companies, loan companies and debt collectors on behalf of ordinary Americans.

The CPFB, he said, was “fighting the big interests on the battlefield every day”.

The appointment of the White House budget director to another job at a time when tax cut legislation and a possible government shutdown are looming, Frank said, showed Trump was not serious about running the CFPB properly.

“This isn’t something you can run in your lunch hour – even if you were in favour of it,” he said.

Wall Street hates the CFPB like the devil hates holy water. And they’re trying to put an end to it with Mulvaney

Senator Dick Durbin

A permanent director must be confirmed by the Senate, which can take months. On Sunday, Senator John Thune of South Dakota, the third-ranking GOP leader, told Fox News he expected Mulvaney “will be on the job and he’ll be calling the shots over there”.

Thune said he hoped to see “reforms to that agency, which has essentially very little accountability to the Congress or anybody else”. Another Republican, Senator Lindsey Graham of South Carolina, told CNN he thought Trump was on “good ground” to pick Mulvaney for the job and hoped Mulvaney “will ride herd on these folks”.

Frank countered that the CFPB was designed to be independent of Congress, like “every bank-regulating agency [that] has some autonomy” in order to keep “political interference to a minimum”. He added that Republicans who say the CPFB is out of control were unable to cite cases in which it has behaved badly.

In a statement, House minority leader Nancy Pelosi said: “All Americans should be deeply concerned about the White House’s cynical decision to flout the law and attempt to put the ringleader of its dangerous, anti-consumer protection policies in charge.”

On CNN on Sunday, Senator Dick Durbin of Illinois, the number two Democrat in the Senate, described opposition to the CPFB in more colourful terms.

“Wall Street hates it like the devil hates holy water,” Durbin said. “And they’re trying to put an end to it.”